BROOKE INSURANCE: Nasdaq Threatens to Delist Brooke

Source: Kansas City Star

Brooke Corp. said Monday that it had been warned by Nasdaq that its stock might be delisted if the company did not raise its share prices to at least $1 by Jan. 12.

Shares in the Overland Park insurance agency franchiser and financial services company closed at 52 cents a share, down 2 cents, before Brooke disclosed the warning in a regulatory filing. Brooke was trading above $13 a share a year ago.

Brooke and its two largest publicly held subsidiaries have been shutting down its once high-flying franchising operations and cutting its work force since January to slash expenses while the enterprise sorts out complex credit arrangements with banks and other lenders.

Robert Orr, Brooke chairman, said in a statement Monday that he expected the company’s share price to meet Nasdaq’s listing standards and close above $1 for 10 consecutive sessions by the January deadline.

“The company is focused on generating additional revenues from our asset base while also considering all strategic operations regarding those assets,” the statement said.

In another cost-cutting move, Brooke Capital Corp., the company’s franchising subsidiary, disclosed it was leaving leased space at the companies’ one-time corporate headquarters at 10950 Grandview in Corporate Woods and moving to a smaller, company-owned building at 8500 College Blvd.

The company also said Monday that it expects to report profits in the third quarter.

A return to profits would follow a difficult second quarter in which Brooke Capital significantly cut costs to redirect its operations.

The company runs the insurance agency franchising operations of Brooke Corp., which owns 81 percent of Brooke Capital’s publicly traded shares.

Brooke Capital said it spent the second quarter gearing down from a growing franchise seller to a “no-growth insurance agency franchisor that is positioned to survive the credit crunch.”

It continues to help lenders seek buyers for underperforming franchisees. After those changes, it will still provide basic franchisor services — commission allocations, document management and advertising assistance — to its existing 875 franchisees.

Carl Baranowski, general counsel of Brooke Corp., said Brooke Capital still sells franchises but far fewer than previously, which significantly reduces franchise fee income. The existing franchises still produce revenues for Brooke Capital.

Brooke Capital had posted $2.9 million in net losses during the first quarter, which added to losses at Brooke Corp.

Both companies, and a related third credit company called Aleritas Capital Corp., plan to report second-quarter results on Aug. 11. Brooke Corp. owns 62 percent of Aleritas’ publicly traded shares.

Brooke Capital expects to report a profit in the third quarter.

Brooke Capital stock dropped 50 cents to $1.40, its lowest level in 52 weeks. Aleritas shares lost 11 cents, closing at 33 cents.